Getting a Loan to Start a Home-Based Business
When looking into getting a loan to start a home-based business, you need to have an ironclad and inspirational idea. Then a lender will be more inclined to invest in you if they know that your product or service can stand out from other competitors.
There are some things to consider before you begin to apply for a loan to start a home-based business.
How is your current credit? – Should you have a poor credit score, you are unlikely to get a loan to start up a home-based business. You can get a copy of your credit report online for free. It will show if you have a habit of maxing out your credit, have ever been made bankrupt, or had any charge-offs or judgments made against you. If you do find that you have any outstanding credit, it is best to clear this before applying for a loan. You need your credit to be a 750 FICO score at least to show lenders that you are a good investment.
Do a self-analysis – think of yourself from the viewpoint of the lender. You are more likely to get a loan to start up a home-based business if you have strong assets. Also, if they like your business idea, and if you have others who are prepared to invest in you to promote your product or service.
Look for a suitable lender – the Small Business Administration (SMA) provides a list of private lenders who are government approved. Meaning that they have to adhere to certain guidelines when lending money to people who want to start a home-based business. Even so, you are not guaranteed to be accepted. So you need to provide all your business and personal bank statements. Along with a report stating how you wish to expand and grow your business, both in the short term and for the future.
Apply to more than one lender – it is advisable to apply to more than one lender if you want to get a loan for your home-based business. Ensuring that you have a clear idea of what you require the loan amount to be. Send each company copy of all the documents that they will need to make their decision to speed up the process. Then you need to remain patient. It can take weeks for a lender to decide whether or not you are a worthwhile investment.
Don’t be too hasty – before you accept a loan to start up a home-based business, you need to make sure that you have considered everything. The amount of loan that you have requested needs to cover your start-up costs, so that there is no need to make any further personal investment yourself. Yet, you do need to ensure that you can cover the repayments for the loan. Also, there may be a chance that another small business has been established while you have been waiting for your own loan to be approved. They could be offering the same products and services that you do, taking away valuable customers for your own home-based business.